18 Dec 2023

Former PM Sir Bill English to head review of Kāinga Ora

8:13 pm on 18 December 2023
Bill English will deliver his valedictory speech in Parliament this afternoon.

Former Prime Minister Sir Bill English at Parliament ahead of his valedictory speech in 2018. Photo: RNZ / Richard Tindiller

The government has confirmed an independent review into Kāinga Ora, the government's social housing landlord, to be carried out by former prime minister Sir Bill English.

The review panel will also include Simon Allen and Ceinwen McNeil. The review will report back to government by the end of March.

Housing Minister Chris Bishop announced the move in a statement on Monday, while fronting the media at the weekly post-Cabinet media briefing.

He said the review would cover Kāinga Ora's financial situation, procurement and asset management, saying he was deeply concerned about its operating deficit.

"It is critical that Kāinga Ora is focused on efficiently building social houses for people in need while also delivering value for taxpayers' money, and this review will be able to provide recommendations to ensure that these objectives are being met," he said.

"The Crown Entity has total assets of $45 billion and annual expenditure of $2.5b ... a recent report by the Treasury and Ministry for Housing and Urban Development found that Kāinga Ora's level of debt had grown from $2.7b in 2018 to $12.3b in June of this year.

"Advice released last year suggests that if Kāinga Ora continues on its current trajectory, their debt would reach $28.9b by 2033."

Since leaving politics, Sir Bill has started social sector businesses with his family and works as a commercial and not for profit director in Australia and New Zealand.

Allen led investment bank BZW/ABN AMRO in New Zealand for 21 years and helped deliver the ultrafast broadband rollout to New Zealand.

McNeil is president of non-profit consulting firms' organisation ACE NZ and has 25 years' experience as a strategy advisor.

Government concern over governance and management

In relation to the Kāinga Ora review announced today, Prime Minister Chris Luxon said at the post-Cabinet media briefing: "We all use public services but some New Zealanders have higher needs than others and one place where that is obvious is in social housing.

"You're all familiar with the story of higher rents - up over $180 a week under Labour, pushing more people onto the waiting list for social housing. There is a lot of complexity in housing, some of the most vulnerable New Zealanders depend on Kāinga Ora and it's important to understand what's going on there."

He says the government is concerned about the governance and management of an asset which is socially and economically important to New Zealand.

"With $45 billion worth of property - roughly around 8 percent of Crown assets - it's important for the Crown's balance sheet too and its debt trajectory is frankly quite concerning."

He says it's a familiar story of Labour hiring more people to produce worse results.

Housing Minister Chris Bishop who also attended the briefing says it's essential that the government has a high degree of confidence in the operation of Kāinga Ora.

He says the level of debt is "obviously a worry" and he's also deeply concerned about the operating deficit, which is forecast to continue to increase.

"This deficit has a direct impact on OBEGAL and continues to put pressure on the return to OBEGAL surplus."

Bishop says Treasury provided additional advice about Kāinga Ora but the government will look to release as much as they can as the review gets finalised.

"Bearing in mind Kāinga Ora is a $45b entity, it has significant private borrowings, and so there is some information that is commercially sensitive but as much as we can make public we will."

He says he's advised Kāinga Ora is solvent, but "I'm also advised that there are worrying trends in the financial performance".

Bishop points to an increase in back-office staff which "has not necessarily flowed through to better outcomes, both in terms of construction of houses but also tenancy management."

"Kāinga Ora no longer borrows in its own right ... but it is true to say that over the last few years they've had significant private borrowings. That will be one of the issues canvassed by the review team."

Asked why they were calling it 'Kāinga Ora' instead of by its English name, Bishop says: "Because ... that's how it's known, that's its name."

Asked what the English name is, Bishop says it is "Homes and Communities" but it has been known as Kāinga Ora since it was set up as a new entity in 2018/19.

The review is one of the items on the government's 100-day plan.

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